Australia’s lagging housing market was bolstered by a jump in multi-unit home sales in the June quarter, but experts say the increase is not enough to offset the ongoing downward pressure sustained in the industry. The Housing Industry Association reported a 30.8% gain in sales in the multi-unit sector over the quarter and 15.7% jump from the previous month, but that still leaves sales 36% off the 10-year average. The overall average was weighted down by dismal detached-home sales, which saw only a 0.7% increase for the month and puts the 2012 totals at or near recessionary levels. For more on this continue reading the following article from Property Wire.
New home sales increased for a second consecutive month in June 2012 due to a spurt in multi units, said the Housing Industry Association, the voice of Australia’s residential building industry.
The HIA New Home Sales report, a survey of Australia’s largest volume builders, showed a rise of 2.8% last month due to a 15.7% jump in the sales of multi units.
However it said that detached house sales continued their disappointing run in 2012, growing by only 0.7% in June following a decline of 2% in May.
‘It is encouraging to see a second consecutive jump in the sale of multi units. Sales were up by 30.8% over the June 2012 quarter. It is, however, a stark reminder of how much catching up is left in the multi unit sector when a lift of this magnitude still leaves sales volumes 36% below their ten year average,’ said HIA chief economist Harley Dale.
Over the June 2012 quarter detached house sales fell by 1.1% and are now 24.5% lower than the volume for the June 2011 quarter. ‘That’s a concerning update which sees detached house sales running at an annualised level 35% lower than the ten year average and 44 below the long term history of the series,’ added Dale.
He expects lower interest rates to assist new housing in 2012/13, but the large gap between the cash rate and variable mortgage rates will blunt their positive impact. ‘Investment and reform from governments is the key ingredient to lifting the new housing sector substantially above the recessionary levels of 2012. State governments have a crucial role to play, as do local governments, but it is the Federal government that needs to act first and lead by example,’ he explained.
In June 2012 the number of seasonally adjusted new detached house sales increased by 2% in New South Wales, 4.4% in South Australia, and 23.5% in Western Australia. Detached house sales fell by 9.6% in Victoria and by 11% in Queensland.
Over the June 2012 quarter detached house sales fell in New South Wales by 6.2%, in Queensland by 21.1% and in South Australia by 8.3%. Detached house sales increased by 9.8% in Victoria due to a final burst from first time buyers in April and May ahead of the ending of the state boost.
In Western Australia detached house sales increased by 9.3% over the June quarter, but problems with the building act means this improvement will not translate into construction activity any time soon.
The HIS also said that building approvals fell only modestly in June 2012 following a strong increase in May. Dale said that the decline of 2.5% in total seasonally adjusted building approvals in June 2012 looks modest in the context of the 27% jump which occurred the previous month.
‘Furthermore, the headline result reflects the sharp decline now underway in Victoria, with building approvals increasing in June in every other state and territory. Building approvals increased in the June 2012 quarter and this improvement is driven by a relatively healthy rebound in other dwellings. The concerning factor is that this recovery masks on-going deterioration in the core detached house segment of the new home building market,’ explained Dale.
‘Housing starts are back at recessionary levels in 2012. It is vital to see evidence of a broad based recovery in building approvals and that is simply not the case at present,’ he added.
Detached house approvals fell by 6.2% in the June 2012 quarter and by 10.2% last financial year to reach their lowest level in over a decade. The trend decline in detached house approvals now extends to 30 consecutive months.
‘That situation makes the case for government investment in new housing and reform of the excessive and inefficient levels of taxation on the sector all the more compelling,’ Dale said.
In June 2012 total seasonally adjusted building approvals fell by 14.6% in Victoria but increased by 7.7% in New South Wales, by 18% in Queensland, by 4.2% in South Australia, by 28.9% in Western Australia, and by 9.3% in Tasmania. In trend terms, total approvals rose by 7.1% in the Northern Territory and by 9.1% in the Australian Capital Territory.
This article was republished with permmission from Property Wire.